Ontario will see nothing like the hiring and investment binge Ford has announced for its Michigan operations, says auto analyst Tony Faria, who blames a labour cost gap between the CAW and UAW contracts.

“It’s just unfortunate – I wish Ontario would attract some (automotive) investment, but I don’t think that’s going to happen,” said Faria, commenting on news last week that Ford will create 2,350 jobs and invest $773 million at six of its Michigan plants over the next two years to answer the growing need for Americans to replace their aging vehicles.

Faria, a professor emeritus of business at the University of Windsor, said during this year’s bargaining with the Canadian Auto Workers the Detroit 3 gave ample warning that to justify new investment in Canada, CAW labour costs needed to be closer to the UAW, where new hires make $15.78 an hour rising to $19.28 by the end of the contract. Virtually all the jobs created in Michigan by Ford will be new hires. The same goes for the hiring that will happen at GM’s Lansing operation when Camaro production moves from Oshawa (where CAW members make $34.33), Faria said.

“It’s a pure economic issue and unfortunately Ontario is losing out jobwise in that regard,” he said.

“One can certainly argue whether $15.78 is a reasonable wage rate and personally I don’t think it is, it’s too low. But from a business perspective, for General Motors, do you want to pay $15.78 an hour or $34.33? It’s a no-brainer decision for the company.”

But CAW national president Ken Lewenza insists there’s no difference between the labour costs in the CAW and UAW contracts. What’s happening in Michigan, he said, is the standard product reinvestment that needs to happen every four or five years. “There’s going to be a significant investment in (Ford’s assembly operation in) Oakville, there’s going to be a significant investment in Windsor when the cycle times come up,” Lewenza said Friday.

“It’s got nothing to do with labour rates. Labour rates account for seven per cent of the total cost of a vehicle. If it was all about labour rates, every single vehicle would be made in Bangladesh.”

And he said the CAW’s newly negotiated rate for new hires – they start at 60 per cent, raising over 10 years to the full rate – is also comparable to the UAW’s lower wage rate for new hires. He also said that he’s been directly told by GM that the Camaro move had nothing to do with the CAW contract, but rather with a desire to consolidate all rear-wheel-drive production into one facility. Now, the CAW is intent on getting GM to replace the 100,000 units a year it’s taking out of Oshawa with 100,000 front-wheel-drive units.

“The reality is Brazil has new decent wages, decent benefits and they’re growing like crazy,” said Lewenza, who also cited Germany, with the highest auto wages in the world, as an example. But, he cautioned, these are jurisdictions where governments get involved in fostering auto investment with subsidies and other incentives.

“If (Prime Minister Stephen) Harper says, ‘Well, let the market dictate where the jobs go,’ we’re going to have less and less jobs.”

In Windsor, where 650 Ford workers are on layoff (though as many as 153 will soon be moving to vacant positions in Oakville), CAW Local 200 president Chris Taylor is encouraged by the Ford investments announced for Michigan. There’s no direct impact on Windsor. “But just to see Ford invest that kind of money in this kind of economy, I’ve got to say bodes well for everybody.”

Ford’s Windsor operations employed 6,300 of Taylor’s members in 2000-01. Now there are just over 1,500 people working at three plants, primarily producing engines. Taylor said he’s trying to set up a meeting with top-ranking Ford officials to discuss plans for engine operations.

“You never know,” he said of what may come of Ford’s Michigan investments. “But it’s a hell of a lot better than layoffs, plant closings and downsizing.”

Lively discourse is the lifeblood of any healthy democracy and The Star encourages readers to engage in robust debates about our stories. But, please, avoid personal attacks and keep your comments respectful and relevant. If you encounter abusive comments, click the "X" in the upper right corner of the comment box to report spam or abuse. The Star is Using Facebook Comments. Visit our FAQ page for more information.

Connect With Us

David P. Lee, a natural-gas trader at the bank from 2001 to 2007, helped U.S. prosecutors investigate fraud that resulted in a record-trading loss for a Canadian bank and a guilty plea by Kevin Cassidy